Children Campaign urges YES vote on Prop 111—cap payday loan rates
The Children’s Campaign is urging Coloradans to vote YES on Proposition 111 to cap the interest rate on predatory payday loans. If passed, payday loans would be subject to the same maximum allowable interest rate for all other installment loans in Colorado.
Payday loans are short-term loans of up to $500. In Colorado, payday lenders can currently charge up to 45 percent in interest, plus fees, so that the average payday loan in Colorado carries an average interest rate of 129 percent.
Addressing predatory lending, such as payday loans, is one strategy to help families protect their earnings and stretch their dollars. Accessing mainstream banking and financial products instead of payday loans can help families save money and stabilize their finances.
Studies show that payday loans impact the health and well-being of children and their parents. Short-term loans and unsecured debt (including payday loans) are negatively associated with children’s socio-emotional development as well as poorer physical health and anxiety in parents. Unstable finances and poor physical and mental health can get in the way of parents being able to provide the care they want to provide for their children.
Payday loans have a disproportionate impact on certain communities. Payday lenders tend to target those with limited credit and banking options. In addition, neighborhoods where families of color live have more payday lending storefronts, even after accounting for income, age, and gender.